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Current Affairs

Tesla’s proposal for tax breaks

Date: 09 February 2022 Tags: Miscellaneous


Tax break proposal by Tesla Inc. has been turned down by Government of India. This was after Tesla failed to provide a coherent plan for manufacturing electric cars domestically.



The government and Tesla were discussing issues related to taxing of imported cars into India, before a decision was made in this regard.



  • Government said that the proposals were rejected as Tesla was asking tax cut only for importing cars into the country with fully assembled units.

  • The company did not have any immediate or firm proposal to set up a domestic manufacturing facility in India.


Government’s concerns

  • The government was negotiating believing that the company was seeking duty cuts and then proposing domestic manufacturing conditional to the sales response in the country. 

  • The government had to reject the proposal as it was also felt that other firms may seek similar concessions.

  • The company was focusing on the super class variant of the car, which was beyond middle-class range. The government believed there was no reason to cut import tariffs.


Start of issue

  • Tesla Inc. had written to the concerned ministries to reduce the import duties on fully assembled cars.

  • Currently, about 60 to 100 per cent is levied on cars imported as completely built units (CBUs). Other conditions include insurance and freight value.

  • After Tesla founder Elon Musk mentioned that he was working through many challenges to start Tesla in India, he received response from all quarters.



Industry ministers of Telangana, West Bengal, Maharashtra and also PCC Chief Navjot Sidhu invited Elon Musk to set up shop in their respective states.